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Suing A Massachusetts Business That Fails to Carry Workers’ Compensation Insurance

stonemason-484465-mMost employers in Massachusetts are required to carry workers’ compensation insurance coverage. In the event an employee is injured, the carrier pays for all claim-related expenses. In exchange, workers are not allowed to file a personal injury lawsuit against their employer. However, when employers do not carry insurance, they forgo the immunity from suit offered by the workers’ compensation laws. A civil suit may be filed against them.

Some of the businesses that fail to carry workers’ compensation insurance are disorganized in multiple ways. An interesting problem arises when the business does not carry worker’s compensation insurance, but nor does it have sufficient resources to pay a personal injury claim. Can a worker then sue one of the partners of the business who may have resources individually? It depends on how the business is organized.

In a recent case, a plaintiff had been injured while working for a granite company. The company was registered in 2007 as a sole proprietorship by Eric Lowe, who listed his personal address as a condo that was owned by his companion of the time, Lefas. After that she did some work for the company, including bookkeeping. She wasn’t compensated for that work on a regular basis, but certain payments were made to her from the company.

The plaintiff was injured on the job, but the company didn’t carry workers’ compensation. Lowe pled guilty to criminal charges and went to jail. That same day, he gave Lefas a power of attorney, authorizing her to act on his behalf. While he was incarcerated, she performed som managerial tasks, writing a few checks. Power of attorney was not revoked. The couple married in 2010.

Because there was no workers’ compensation insurance, the plaintiff filed a lawsuit against the company and also against Lefas for his injuries. His theory was that he could sue her individually because she was a partner in the business that lacked worker’s compensation. The court ruled that he could not maintain the suit against Lefas because there was no evidence of a partnership or sharing profits or losses.

The plaintiff argued that the judge had improperly excluded certain portions of affidavits. He also argued there was enough evidence to show there was a partnership in the fact that Lefas shared company profits and her continuing management of the business while Lowe was jailed made her jointly and severally liable with Lowe.

The appellate court explained a partnership is an association of two or more people that act as co-owners of a business for profit. Evidence of partnership includes an agreement by the parties that shows intent to form a partnership, sharing of profits and losses, participation in control or management.

The plaintiff did not present any of this evidence. The appellate court explained that even if the plaintiff argued that Lefas’s participation after the incarceration changed the nature of her role, at the time of the plaintiff’s injury, she was only performing non-managerial tasks and those were on a non-routine basis. The defendant was entitled to summary judgment.

The case described above is unusual. If you are hurt at work,  you may be entitled to workers’ compensation benefits. An experienced Massachusetts workers’ compensation attorney can evaluate whether you have a sound claim and fight to make sure that your employer and its insurer follow the rules or give you guidance if there is no insurance available. Contact us by calling 800-367-0871 or using our online contact form.More Blog PostsSubmitting Additional Testimony in Massachusetts Workers’ Compensation, March 12, 2013

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Impact of Misrepresentations About Your Activities in Massachusetts, March 7, 2013